A good business plan needs to address the finances too.

A good business plan is something like a map in that it should help you to navigate to where you want to go. It is a necessity not just for you but also for potential investors or banks that may finance your business. A good business plan needs many things, one of which is financial projections for income, expenditure, capital and cash requirements of the business.

These financial projections will take some time to prepare. It’s worth it though as you need them to complete a business plan and tout it to banks and potential investors. You should first try to plan how much you can sell and at what price. Then, work out how much it costs to buy or produce what you hope to sell and any other costs. These plans won’t be 100% accurate, but they should be based on reasonable assumptions. You should also try to plan your capital requirements i.e. how much you need to buy equipment and other assets for the business. Plans for capital are very useful when approaching banks if you need to borrow to buy the equipment.

Finally, you should also include a cash projection in your business plan. This involves predicting when cash comes in to the business and when cash needs to be paid to suppliers, employees etc. This can help identify any cash shortages which might arise and plans can be made to rectify this.